The result was underpinned by a gain of more than 30% from
New Zealand earnings.

It appears the long-awaited construction boost to the
economy, through the Christchurch rebuild and the Auckland
housing shortage, is gaining momentum.

However, Fletcher shares subsequently took a surprise
hammering after the announcement.

While total revenue for Fletcher in its six months trading to
December was down 3% at $4.38 billion, earnings before
interest and tax (Ebit) were up 2% to $262 million and
cashflow was up 58% from $129 million to to $204 million.

Analysts had forecast a slight decline in after-tax profits
between 4% to 8%, but Fletcher booked a 1.3% increase from
last year's $144 million, up to $146 million.

However, Craigs Investment Partners broker Peter McIntyre
said in response to the ''reasonably good'' result there was
a subsequent ''aggressive sell-off'' and ''hammering'' of
Fletcher shares, trading down 52c to $8.80, with a heavy
volume of more than 3.2 million shares worth $18 million sold
by about noon yesterday.

He said the shares had enjoyed a ''strong run up'' in value
before the result, and there would have been some profit
taking by some shareholders yesterday.

Fletcher will repeat its 17c dividend; with the stock closing
yesterday at $8.87, having closed on Tuesday at $9.32.

While costs savings of up to $75 million were announced by
Fletcher earlier, yesterday's result contained few details,
other than the strategic review was under way. Fletcher chief
executive Mark Adamson said the result was driven by improved
trading conditions in New Zealand, with earnings up 31%, but
that was offset by weak construction markets in Australia and
further restructuring costs.

He reiterated earlier guidance, unchanged, that for the full
year Ebit was expected to be in a range of $560 million to
$610 million.

''The pace of new residential construction in New Zealand has
improved substantially over the past six months in both
Canterbury and Auckland, and this has positively impacted
those businesses exposed to this sector.

''In addition, we have seen strong momentum in rebuilding
activity in Canterbury,'' he said.

However, Mr Adamson said that in contrast, Australia
reflected ''weak market conditions'', with most businesses
experiencing volume declines, and overall Australian
operating earnings declining by 12%.

Similarly, while revenues were ahead in Southeast Asia, they
were flat in North America and down in China and in Europe.

Forsyth Barr broker Peter Young said the result was ''above
our estimate of $136 million'', although this reflected
better-than-expected tax and interest costs during the
period.

''The underlying Ebit was in line with our expectations,
highlighting an improving backdrop in New Zealand and weak
market conditions in Australia,'' Mr Young said.

Mr McIntyre said the Australian operations would have been a
disappointment. He was confident the Reserve Bank of
Australia would ease interest rates in coming months, which
would ''create a tail-wind and a boost to Fletchers''.

Overall, Fletcher's construction division's Ebit for the
period were $37 million, or 48% higher than the previous
year, led by the ''significant'' lift in residential house
sales and increasing earthquake recovery work around
Canterbury, Mr Adamson said.

Fletcher, as lead contractor in Christchurch, now has more
than 1100 accredited contractors; having done more than
30,000 home repairs and 47,000 emergency repairs.

The last of a forecast 100,000 home repairs is expected to be
completed by 2015.

Mr Adamson said while Fletcher's construction backlog was
down from $1.2 billion to $1.19 billion, the company was
preferred contractor for a delayed $550 million project and
it won a separate prison contract, worth just under $300
million.

Mr Young said ''management expects continued activity gains
in New Zealand given the improvement in residential consents,
but sees no improvement in Australian trading through the
second half''. Fletcher's full-year guidance for delivering
Ebit of $560 million to $610 million was consistent with
Forsyth Barr's estimate, after restructuring and impairment
charges, of Fletcher booking $596 million Ebit, he said.